HMO Kaiser Permanente needed tighter alignment between its software developers and its business goals. A new requirements management system proved to be strong, but effective, medicine.

For most organizations, software development is seldom easy. Projects are often fraught with miscommunication between the information-technology department and the business units. Key requirements may get short shrift or be omitted altogether until the last minute, when both costs and tempers are likely to soar.

Now, one of the nation's largest health maintenance organizations is revamping the front end of its development process to ensure a tighter alignment with its business goals. As part of a sweeping overhaul of its software development setup, Kaiser Permanente, the $31.1 billion HMO, has installed new software and processes for defining the business requirements of new systems.

About 700 of the Oakland, Calif., company's 2,000 software developers will be using the development system, which is based on a requirements definition and management package from Borland Software.

Ultimately, Kaiser's initiative will tackle not only software design, testing and change management, but also how costs and project length are estimated and the process is measured.

"If there is a change in a project's scope, we want to know the impact down to the dollar," says Aaron Schleifer, project manager for requirements development management at the HMO.

The company's goal is to reduce errors and speed project development by standardizing the way the organization's developers outline corporate needs for new systems.

At Kaiser, which serves 8.4 million members through 30 medical centers staffed by 12,000 physicians, there are a few hundred development projects underway at any given time. It's no surprise, then, that the payoff of a streamlined process with fewer errors and reduced rework can be huge.

Kaiser won't say exactly how much it expects to save, but Schleifer points to an estimated reduction of 40% in project time lines, according to studies from Borland and the Software Engineering Institute. "It is obvious that the business case for a managed software life cycle will yield significant financial gain," he says.

How much is "significant"? Try eight figures. For a large organization with an information-technology budget of more than $1 billion, such as Kaiser, the savings could reach $60 million in reduced rework alone, estimates Matt Klassen, worldwide product marketing manager at Cupertino,Calif.-based Borland.

"By validating requirements early, companies like Kaiser can eliminate rework," Klassen explains. "The average development project has anywhere from 30% to 50% rework, and more than half of all rework is directly due to requirements errors."

"We like to say that $1 spent on getting the requirements right the first time can save $10 later when you're testing code," Schleifer says. Adds Kelly Cannon, vice president of applications delivery at the HMO, to whom Schleifer's business process management group reports, "How well we collect the requirements from the user is directly related to the quality of the software we develop."

But, he points out, "The real benefit will be a consistent requirements process with a repeatable result." In other words, when Kaiser developers attempt to put together a new system using the same process followed for a similar earlier system, they can be assured that by using the same process and tools, the project will conclude with an equally successful outcome.

Doug Bartholomew is a career journalist who has covered information technology for more than 15 years. A former senior editor at IndustryWeek and InformationWeek, his freelance features have appeared in New York magazine and the Los Angeles Times Magazine. He has a B.S. in Journalism from Northwestern University.